Reports: Continental and United agree to all-stock merger

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bimjim
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Reports: Continental and United agree to all-stock merger

Unread post by bimjim » Mon May 03, 2010

http://www.travelweekly.com/article3_ektid213860.aspx

Reports: Continental and United agree to all-stock merger
By: Michael Fabey
May 02, 2010

The boards of United and Continental have agreed to a $3 billion all-stock merger, creating the world’s biggest airline in a deal that will be announced Monday, according to media reports.

The transaction, approved by Continental’s board late Sunday afternoon, is expected to close in the fourth quarter, the New York Times reported.

The new combined company, called United, will be based in Chicago and be run by Continental CEO Jeff Smisek, with United Chairman Glenn Tilton serving as chairman for two years, the Times reported.

The airlines will have about 21% of the domestic travel market, vaulting ahead of Delta, which became the largest carrier after merging with Northwest.

The media, Wall Street analysts and other industry experts have been speculating on a potential merger for weeks.

United had initially been in merger talks with US Airways until about two weeks ago, when US Airways said it pulled the plug on those negotiations.

Some analysts felt United only talked to US Airways to bait Continental into merger negotiations.

The airlines had been talking merger in the latter half of the previous decade, but fuel price hikes in mid-2008 ended the opportunity, as the carriers focused on their individual survival.

Analysts say a United-Continental merger would make more sense than a United-US Airways union – and be more likely to secure federal approval – because the United-Continental combination would have more complementary networks and the two already have antitrust immunity on transatlantic routes as part of their Star Alliance partnership.

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